So I would need to see some studies on this, but I have a suspicion as to what is causing the supply and demand denial to kick in for housing.
In my personal life, I've noticed many people deny supply and demand for Healthcare as well. The idea that if we reduce diseases by 90% and also quadruple the number of Healthcare providers, the price of Healthcare services would not change at all. The people I have seen believe this are not stupid.
What I think is happening is that humans want problems to have easily identifiable villains. Healthcare and housing are definitely problems today. Because of that, people are defaulting to thinking there must be a "bad guy" out there causing it. I think this is why populism is so enticing as a political strategy as it plays into that natural tendency to blame problems on some specific out group (corporations, immigrants, ethnic minorities, etc.) Instead of systemic issues. Supply and demand unfortunately doesn't have some obvious villain that can be pointed out.
I would love these economists to try the same thing with Healthcare to see if my suspicion is correct and the supply and demand denial kicks in there as well. If anyone likes this comment, try it in your personal life and see what happens.
Ah yes I have read this paper before and now I see they did discuss that.
I think using the healthcare comparison is a good way to test the hypothesis that housing supply and demand denial is downstream of a need for a villain. After all, people absolutely are as angry about healthcare as they are housing. People aren't angry about cars, steel, or plumbing services so they accept supply and demand.
For me with a sample size of about 10, I only had 2 people accept that supply and demand applies to Healthcare services. Eerily similar to housing. Unfortunately I'm just one man so don't know if this generalizes. Would love if these economists did a paper on it as well.
Yup, the private equity boogeyman who’s buying up all this housing and then just sitting on it. People are fundamentally unserious about a lot of this stuff.
Yeah. I know about this Rao’s stuff because Paul Freedman in the history department told me he went there. He said the food was alright but you’re mainly paying for the vibe + the flex of getting to say you got to go to Rao’s.
Anyways they apparently started selling the jarred sauce several decades (or maybe even a century) after the restaurant opened.
Three of the policy changes in Austin were specifically directed to increase the supply of below market rentals- making it easier to build accessory units, allowing buildings to be taller if they include units rented at below market prices and most significantly issuing hundreds of millions of dollars in municipal bonds to pay for affordable housing. Developers understandably build in order to make a profit and will not construct below-market units without policies that reward them financially for doing so (i.e. building taller buildings) or government subsidies (i.e. hundreds of millions of dollars in municipal bonds to pay for affordable housing). I agree there will be a trickle down effect which enables lower income families to move into newly vacant units but I suspect that will not be nearly enough to address the housing affordability crisis without government action to encourage and enable private developers to build a mix of market and below market units.
This piece was originally about twice as long and had a whole second section discussing inclusionary zoning policies, which aim to create below-market-rate units. That section ended up being spun out into its own piece. Need to do some reporting after exams, but hopefully it will be out soon.
It’s interesting to see this. I’ve long believed that housing behaves in market ways and it’s nice to know that Austin shows some positive fruits here. I think one of the things that keeps people believing that its not a market is that it can only really go down so far because more room and dormitory style housing is straight up illegal in most of the country.
Like to get down to you can afford a place to live with your minimum wage job you really have to get into a whole different mode of housing than even apartments it appears to not really be a market. Like I live in Orlando and I see construction all over the place but it’s all sort of the same thing and yes filtering but actually you can raise your family here on the bottom rungs of the labor market isn’t something that you can just go get.
So I would need to see some studies on this, but I have a suspicion as to what is causing the supply and demand denial to kick in for housing.
In my personal life, I've noticed many people deny supply and demand for Healthcare as well. The idea that if we reduce diseases by 90% and also quadruple the number of Healthcare providers, the price of Healthcare services would not change at all. The people I have seen believe this are not stupid.
What I think is happening is that humans want problems to have easily identifiable villains. Healthcare and housing are definitely problems today. Because of that, people are defaulting to thinking there must be a "bad guy" out there causing it. I think this is why populism is so enticing as a political strategy as it plays into that natural tendency to blame problems on some specific out group (corporations, immigrants, ethnic minorities, etc.) Instead of systemic issues. Supply and demand unfortunately doesn't have some obvious villain that can be pointed out.
I would love these economists to try the same thing with Healthcare to see if my suspicion is correct and the supply and demand denial kicks in there as well. If anyone likes this comment, try it in your personal life and see what happens.
Yes! The need for "villians" is discussed in Elmendorf, Nall, and Oklobdzija (2025) — see Figure 3.
Ah yes I have read this paper before and now I see they did discuss that.
I think using the healthcare comparison is a good way to test the hypothesis that housing supply and demand denial is downstream of a need for a villain. After all, people absolutely are as angry about healthcare as they are housing. People aren't angry about cars, steel, or plumbing services so they accept supply and demand.
For me with a sample size of about 10, I only had 2 people accept that supply and demand applies to Healthcare services. Eerily similar to housing. Unfortunately I'm just one man so don't know if this generalizes. Would love if these economists did a paper on it as well.
Yup, the private equity boogeyman who’s buying up all this housing and then just sitting on it. People are fundamentally unserious about a lot of this stuff.
> almost impossible to get a reservation at Rao’s in New York City
That’s wild because they sell it in jars at the grocery store
Yeah. I know about this Rao’s stuff because Paul Freedman in the history department told me he went there. He said the food was alright but you’re mainly paying for the vibe + the flex of getting to say you got to go to Rao’s.
Anyways they apparently started selling the jarred sauce several decades (or maybe even a century) after the restaurant opened.
Three of the policy changes in Austin were specifically directed to increase the supply of below market rentals- making it easier to build accessory units, allowing buildings to be taller if they include units rented at below market prices and most significantly issuing hundreds of millions of dollars in municipal bonds to pay for affordable housing. Developers understandably build in order to make a profit and will not construct below-market units without policies that reward them financially for doing so (i.e. building taller buildings) or government subsidies (i.e. hundreds of millions of dollars in municipal bonds to pay for affordable housing). I agree there will be a trickle down effect which enables lower income families to move into newly vacant units but I suspect that will not be nearly enough to address the housing affordability crisis without government action to encourage and enable private developers to build a mix of market and below market units.
This piece was originally about twice as long and had a whole second section discussing inclusionary zoning policies, which aim to create below-market-rate units. That section ended up being spun out into its own piece. Need to do some reporting after exams, but hopefully it will be out soon.
It’s interesting to see this. I’ve long believed that housing behaves in market ways and it’s nice to know that Austin shows some positive fruits here. I think one of the things that keeps people believing that its not a market is that it can only really go down so far because more room and dormitory style housing is straight up illegal in most of the country.
Like to get down to you can afford a place to live with your minimum wage job you really have to get into a whole different mode of housing than even apartments it appears to not really be a market. Like I live in Orlando and I see construction all over the place but it’s all sort of the same thing and yes filtering but actually you can raise your family here on the bottom rungs of the labor market isn’t something that you can just go get.